What is the beneficiary and who is the beneficial owner (beneficiary): a detailed description and definition of the term, rights and obligations + sample documents for download

Hello dear readers of the financial magazine Rich Pro! In this article we want to tell who is the final beneficiary (beneficiary), who are the beneficial owners, how do the beneficiaries differ from the beneficiaries, and so on.

Indeed, the development of economic relations implies the emergence of new entities in this sphere of economic activity of a society, to designate which special terms are used.

In the formation of a market economy, such entities became the categories of persons who profit from various types of entrepreneurial activity or derive income by using investment instruments. To define such persons, this term is used.

From the material you will learn:

• Beneficiary - who is it?
• Differences between beneficiaries and beneficiaries;
• Who is the beneficial owner (owner) and how to submit information about the beneficial owner - to whom and why they are needed;
• How to stop the violation of the rights of beneficiaries - rights and obligations
• and so on.

So, we will consider each item in detail.

From the article you will learn everything about the concept of “beneficiary” (beneficiary): who is and what is it, to whom and what information about the beneficial owners should be submitted, and much more

1. Who is the beneficiary - full description of the term

This term comes from the French word for profit, profit.

Therefore, the simplest definition of the term "beneficiary" (also beneficiary) is a person making a profit.

In a less simplified sense, beneficiary (beneficiary)- this is the person who actually owns the assets, business entities and other values ​​of the organization.

In economic activity, not everything is determined by the amount of income received in a given period. The prospects and directions of profit-making activities are also important, and the source of managing financial flows is already important here, because the viability of a commercial enterprise and the amount of income received depend on their distribution and use.

Therefore, in a broader sense, the beneficiaries (beneficiaries) are considered not only individuals and legal entitieshaving income from certain financial transactions, but also persons with the ability to control the activities of the organization and disposition of her property.

That is, beneficiaries are persons who actually own a particular company.

2. Who are the beneficial owners - definition

The legal definition of the beneficial owner is contained in Federal Law of the Russian Federation No. 115 of 08/07/2001.

According to this definition:

Beneficial owner - this isan individual who directly or indirectly has a predominant participation in a legal entity (more than 25%) and the ability to control the actions of a legal entity.

The same regulatory act defines the beneficiary as a person to whose benefit actions are taken in relation to cash and property, including on the basis of relevant agreements (agency, surety, trust management, commission).

Who is called the beneficial owner and who can become them

Depending on the scope of economic relations and situations arising in the process of disposing of property, the meaning of the term "beneficiary" may vary somewhat.

Based on the type of activity and relation to property, the beneficiaries may be:

• heirs indicated in the will as persons who take certain property into ownership or management, as well as persons who are beneficiaries in the event of the death of the recipient of any payments;
• landlords who lease their property for a regular fee;
• account holders;
• clients of trust organizations that have provided their property or finances in trust for income generation;
• owners of documentary letters of credit;
• persons who are recipients of payments under insurance contracts;
• actual company owners.

To ensure their own security or to exclude claims from various government bodies, in the modern financial world very often resort to hiding information about the true owner of certain assets.

This is especially true for property and business management of legal entities.

3. Beneficial owner of a legal entity - rights and features

Beneficial Owner - this is one or more actual owners of the organization, having right or opportunity direct or indirect impact on the company.

In this case, the personal data of such persons may not be indicated in registration and statutory documents of the organization or their official participation in the company may be significantly downplayed.

The identity of such owners is generally known. only bank clerk and commercial agents.

The beneficiary of a legal entity can take part in the meeting of shareholders and other owners of the company, in the reorganization of the legal entity, its vote is dominant in resolving issues related to the distribution of profits, the organization’s participation in investment projects.

Non-disclosure of information on actual owners used frequently:

• when conducting business using offshore zones;
• in optimizing the taxation of organizations;
• in the legalization of funds received in violation of the law.

To ensure the participation of the actual owner in the organization’s activities with non-disclosure of information about his personality, various property registration schemes and title documents.

The main schemes for registering the property of beneficiaries (beneficiaries). When constructing complex schemes for registering property and settlements, it is important to correctly and clearly understand and use the tax laws of the jurisdictions used. Only with a competent structure and organization structure will they really turn out to be anonymous, tax-free or low-tax, protected from unfair actions of third-party (third) parties

For example, the beneficiary gains access to company accounts on the basis of a power of attorney issued in his name by the nominee director. Ownership is carried out through ownership of bearer shares or by attracting individualsacting as nominee shareholders.

Or, the beneficiary enters into an agreement with a trust fund to manage company shares, access to the organization’s accounts and the ability to manage them, the beneficiary receives through an authorized person.

4. Who is the ultimate beneficiary - definition 📖

Definition of the term - ultimate beneficiary

The chain of beneficiaries always ends with a specific person who receives a certain profit. It is such a person who is the ultimate beneficiary.

In this way, ultimate beneficiary - this is an individual making a profit from the activities of the company or property management.

5. The difference between the beneficial owner and the beneficiary is the main difference

In a number of sources, the concepts beneficiary and beneficiary are identical, at the same time, in the Russian legislation these two terms have some differences.

The concept of the beneficiary is narrower. To be considered as such, the beneficiary should have more than 25% share in the capital of the organization and have access to company management and control.

In this regard, the control authorities in the fight against illegal actions are of interest to the beneficial owners of the companies, as individuals who determine the organization’s policies and make decisions about possible illegal fraud.

6. Who needs the information about beneficial owners and why

Beneficial Owner Information Important for government in order to counter:

• legalization of proceeds of crime;
• financing of terrorist and other criminal organizations;
• illegal withdrawal of funds abroad.

For organizationsWhen lending to a business, information about the ultimate beneficiaries is important when deciding whether to grant loans. Based on the identity of the beneficiary, the reputation of the company and the risks of its lending are assessed.

Reporting information about ultimate beneficiaries at the request of banking institutions is mandatory for organizations wishing to obtain a loan or open an account with a bank.

To submit information about the beneficial owner, we suggest downloading sample documents:

Information on the beneficial owner (doс. 60.5 kb)

Information on beneficial owners for the purposes of Federal Law 115 - Sberbank Form (doc. 139 kb)

Sample document filling (section 1)

Information on the beneficial owner - a sample of filling in the form of Sberbank, section 1

At the same time, credit organizations in Russia must provide information on beneficiaries to Rosfinmonitoring.

Failure to comply with this requirement may result in significant penalties for organizations related to financial transactions:

• securities market participants;
• Insurance companies;
• pawnshops;
• leasing companies (What leasing is and why we need it, we already wrote in a previous article);
• credit organizations.

Who needs the information about the owners of the company and for what, including the beneficiaries

Information about the actual owners may be requested from the company and by themselves state and municipal structuresas well as related commercial organizations.

In addition to counteracting illegal actions and financial fraud, such information may be requested when concluding various public procurement contracts.

When providing information about the owners, a document is drawn up containing information about the owners of the company, up to individuals who are the founders of organizations that are among the participants in the company.

This certificate is called "Information on the ownership chain, including beneficiaries", information about the name of the company, its management, information about the founders (company details, passport data, residential addresses of individuals).

Example of filling out a document:

An example of filling out the document “Information on the chain of owners”. You can download the document below the link.

Download example fill and sample:

Information on the chain of owners, including beneficiaries + instructions for completion (doc. - 41.6 kb)

Table (example), where and what data should be indicated:

7. General rights and obligations of the beneficiary (beneficiary)

The beneficiary has a number of rights protected by law. Naturally, legislative protection is guaranteed. only with paperwork the relationship of the beneficiary and its agents - nominee company and account ownersat.

Beneficiary has the right:

• dispose of their share in the enterprise. The beneficiary may, for example, partially or fully sell his share;
• supervise the fulfillment of duties by the company's management, appoint and dismiss the CEO legally;
• participate in joint stock and constituent meetings, in accordance with the share to participate in decision-making;
• receive income from the activities of the company in accordance with the amount of dividends.

The functions and rights of the beneficiary vary depending on the sphere of economic relations in which the person acts as the beneficiary.

For example, if a company participates as a beneficiary in providing bank guarantees, it is obliged to timely comply with the relevant conditions of the agreement.

At the same time, the beneficiary company has the right to fulfill obligations to repay the debts undertaken by the guaranteeing organization.

8. Participation of the beneficiary (beneficiary) in insurance and inheritance

Beneficiary (beneficiary) in insurance - These are persons who receive insurance payments upon the occurrence of an insured event (with previously concluded insurance contracts).

At the same time, the beneficiary not necessary is the person or property owner insured in accordance with these contracts.

For example, upon obtaining a mortgage loan, property that becomes the property of the borrower is insured, and by the beneficiary in case of damage or destruction of property that is the subject of a pledge, there will be a creditor. At least until the moment the borrower fulfills the terms of the loan agreement.

The beneficiary of insurance payments may also be determined by the insured person. For example, in life insurance, the beneficiary of the insurance may be the spouse of the insured person.

In hereditary matters beneficiary may vary depending on the will of the testator or as a result of the death of the persons specified in the will. Thus, property can bequeath to a relative to whom the testator entrusts custody of minor children.

Or the will shows the brother of the deceased, but in the event of his death before receiving the inheritance, the heirs of the brother (heirs by right of representation) will actually receive the property.

Thus, in the distribution of the inheritance, the beneficiaries will be the persons indicated in the will and persons entitled to the inheritance by law.

9. Beneficiary participation in a bank guarantee

In banking, the service of providing a bank guarantee is currently widespread.

When concluding a transaction between two parties, the institution providing such a guarantee is vouching for the fulfillment of obligations under a transaction by one of the parties or for the performance of the contract as a whole.

The deal, thus, becomes tripartite, takes part in it:

• guarantor (organization providing a guarantee);
• beneficiary (party to which, for example, should be paid a monetary reward for fulfilling the terms of the transaction or certain services are provided);
• Principal (party applying for a bank guarantee).

Participation of the principal and beneficiary in a bank guarantee - scheme and principle of operation

Who are the principal and beneficiary in a bank guarantee - differences and features

Principal and Beneficiary - these are absolutely opposite sides of legal relations. In this case, the beneficiary will be the creditor, but the principal is the debtor, where a third party (guarantor) assumes the default.

Guarantees for the fulfillment of the terms of the contract may also be provided in order to ensure:

• making payments in specific situations;
• refund of advance payments;
• execution of work under various contracts and tenders, including state ones.A bank guarantee is provided by the contractor to confirm their own financial viability;
• moving goods through customs;
• Refunds granted under loan agreements.

Despite the name, in practice, such warranties may also be provided. insurance companies and commercial organizations at the request of the principal. This circumstance is among the legal conflicts in the Russian Federation.

On the one hand, the issuance of guarantees by law relates to banking operations, and on the other hand, limiting the circle of persons acting as a guarantor of fulfillment of contractual obligations is contrary to international practice and unreasonably narrows the scope of use of this financial instrument.

The insurance company may be fined for the performance of services referred by the Russian legislator to banking operations, or its license may be revoked, if the insurance companies seemed to have the natural ability to insure a commercial transaction by providing guarantees.

The beneficiaries of the existence of such a conflict can be banking institutions that are actively lobbying for their own interests and currently have in Russia an actual monopoly on the right to act as a guarantor in contracts. The cost of a bank guarantee varies from 2 to 10% on the size of the guarantee payment.

The beneficiary of direct bank guarantees is the party to which compensation is paid by the guarantor in case the principal does not fulfill his obligations under the concluded transactione.

10. Controlling entities and offshore 🗺

An offshore is a country or territory of a state with simplified business conditions. In detail about offshore - what is it when we better use them in the last issue.

In such economic zones, there is great potential for hiding data on real business owners due to the special registration and reporting regime of non-resident organizations.

The legislation of many countries regularly introduces various restrictions for residents on operations with organizations registered in offshore zones. However a complete ban is practically not applied anywhere.

The term "controlling entity" was used before the term "beneficiary" appeared in domestic law. For the owner of a share in the enterprise to fall within this definition, it was necessary to own straight or indirectly more than 50% of the company’s shares or votes in the governing body. It was the size of participation in the organization that determined the availability of enterprise management capabilities.

This approach complicated the work of law enforcement agencies, because to avoid liability it was enough to divide the property in the company between the three owners (i.e. the owner 49 % the organization’s shares evaded responsibility).

The adoption of the term "domestic lawmakers"beneficiary", allowed us to somewhat reduce the discrepancy between terminology and the realities of economic activity, focusing primarily on the control of the organization.

Currently under controlling persons are understood as owners not less than 10% company sharesgiving them the right to vote, as well as persons holding positions in the organization, allowing them to influence the decision-making processes in the company.

Protecting the Beneficiary's Rights from Third Parties - Key Recommendations

11. Violation of the rights of the beneficiary - recommendations for the protection of rights

The rights of the beneficiary can be violated both by other business owners and by the management of his own enterprise.

The main methods of violation of the rights of the actual owner are:

1. Failure to comply with the agreement concluded between the owners or with the hired management of the company;
2. Implementation by the organization of illegal activities, including without an appropriate license;
3. Reducing the ability of the beneficiary to control the activities of the organization;
4. Concealment by company management of information on the actual state of affairs in the organization;
5. Obstacle to income from company activities or property management.

In order to avoid the negative consequences of violation of the rights of the beneficiary, it is recommended concluding written agreements, including trust agreements.

Such agreements may ensure non-disclosure of information about the beneficiary and the actual owner of the property or company, as well as provide the opportunity to recover damages from illegal or unprofessional actions.

12. Are there organizations without beneficiaries

Organizations that do not have beneficiaries may be various non-profit associations, since their purpose not making a profit.

As for commercial organizations, then, of course, if there is profit, then there are persons who receive income. However often establishing the ultimate beneficiary is not possible.

Therefore, despite the fairly broad powers and capabilities of banking institutions and government agencies to establish actual beneficiaries, existing schemes for concealing true business owners allow you to keep the identity of the final beneficiary secret, especially in cases of trust management of a business or property.

13. Conclusion + video on the topic

In the context of the relative novelty of the concept of the beneficiary in the domestic economy, the practice of applying this term, defining the rights, duties and responsibilities of the beneficiaries in carrying out activities of controlled commercial organizations and managing various property, not yet fully developed.

This is also hindered by the involvement of various politicians and civil servants in the shadow management of various financial structures and assets.

At the same time, it is the provision of transparency of information about the actual owners of property, shares and shares in enterprises, especially those with the ability to manage organizations, that will allow increase tax efficiency and protect fair market players from involvement in a variety of shadow and illegal financial frauds.

In conclusion, we offer you to watch a video about clarifications under the beneficiary's law:

Dear readers of the magazine Rich Pro, if you have any questions or would like to share personal experience on the topic, please write them in the comments below.

Watch the video: Filing of Form No BEN-2 By Company to ROC to Declare Significant Business (November 2024).